* Q2 net 122,000 euros vs forecast 4.7 million
* Bad loan ratio 12.32 percent vs 12.68 pct in Q1
* Cost cuts to deliver 175 mln euros annual savings (Adds CFO comments, details on real estate)
By Angus Berwick and Jesús Aguado
MADRID, July 29 (Reuters) - Spain's Banco Popular fired CEO Francisco Gomez and announced cost cuts on Friday as it saw profit nearly wiped out in the second quarter, a month after it made a 2.5 billion euro ($2.8 billion) share issue to clean up toxic retail assets.
Popular, the publicly listed bank with the biggest exposure to Spain's troubled retail sector, said it would begin a plan to cut costs that it expected to generate savings of around 175 million euros ($194 million) annually from 2017.
It also said it would split its property business from the rest of its banking activity in a bid to isolate a mountain of bad loans which have weighed on the lender's performance and hampered its attempts to recover from a deep crisis.
"Over the last month, and following the capital increase, the board has assessed the financial challenges and the difficult macroeconomic environment and has decided to open a new chapter by separating the ordinary business from our real estate activity," said Chief Financial Officer Francisco Sancha.
"And for this new chapter, the board wanted a new structure with a new management," he added.
Gomez, CEO since 2013, will step down immediately to be replaced on Sept. 1 by Pedro Larena, head of international retail banking at Deutsche Bank, Popular said.
Spain's sixth-biggest bank in June finalised the 2.5 billion euro share issue to clean up its balance sheet and announced provisions of 4.7 billion euros, which it said could lead to overall losses of 2 billion euros in 2016.
After the share sale, Popular said its fully-loaded core capital ratio, a key measure of a bank's strength, was 13.55 percent against 11.1 percent in the previous quarter.
Popular's second-quarter net profit was just 122,000 euros, hit by bad loans and below analysts' forecasts in a Reuters poll of 4.7 million. Net interest income, a measure of a lender's earnings on loans minus deposit costs, was also slightly lower, due to increased competition for lending in Spain.
Its bad loan ratio, the highest among Spain's mid-sized and big banks, ended June at 12.32 percent compared with 12.68 percent after the January to March period. Without the property exposure, it would stand at below 5 percent.
Shares in the bank were up 1.06 percent to 1.24 euros at 0955 GMT, underperforming domestic and European peers but roughly in line with a 1.2 percent rise of Spain's blue-chip index Ibex.
Popular's larger peers Caixabank and BBVA both reported strong profit growth on Friday.
$1 = 0.9020 euros Editing by David Holmes and David Evans